The World Trade Organisation's appeal body handed down a final ruling on Monday that found that subsidies and tax breaks to US planemaker Boeing caused serious prejudice to its European rival Airbus. "In completing the analysis, the Appellate Body found that" subsidies and tax breaks "caused, through their effects on Boeing's prices, serious prejudice in the form of significant lost sales" to Airbus in the market for civil aircraft with 100-200 seats, according to a summary of the 700-page ruling.
That segment is for the medium-haul Airbus A320 and Boeing 737, which are their top selling aircrafts. The WTO appeals panel reversed a number of findings from the initial ruling last March, saying that tax breaks provided to Boeing from the US state of Washington and the city of Wichita, Kansas magnified other subsidies and caused price effects that caused lost sales.
The US has six months to comply with the ruling. Even before the publication of the WTO ruling, both the European Union and United States claimed victory in the dispute. The EU had launched the complaint, claiming the United States gave Boeing billions of dollars in illegal subsidies after Washington had disputed EU aid to European aircraft manufacturer Airbus.
In a ruling on March 31, 2011, the WTO partly upheld the EU complaint, but it was appealed. The European Commission on Monday welcomed the WTO final ruling, saying it confirmed that billions of dollars in US subsidies to Boeing were illegal under WTO rules. "Today's ruling vindicates the EU's long-held claims that Boeing has received massive US government hand-outs in the past and continues to do so today", said EU Trade Commissioner Karel De Gucht.